OxyChem announces $30/ton price increase for liquid caustic soda

29 August 2014 23:19 Source:ICIS News

HOUSTON (ICIS)--US chlor-alkali producer Occidental Chemical, known as OxyChem, on Friday announced an off-schedule $30/dry short ton (dst) price increase for liquid caustic soda for the US market effective immediately for spot purchases and as terms allow for contract buyers.

The move likely would affect monthly contract buyers for October business, given the usual requirement for 30-day notice. The company’s 100% order control and required lead times of 30 days for barge shipments and seven days for rail delivery remain in place, as do current temporary voluntary allowances.

In Canada, the company said it would seek a Canadian dollar (C$) 35/dst ($32/dst) increase. 

Oxy did not provide a reason in the letter received by ICIS. But company officials point to strong domestic demand and have recently suggested that higher ethylene costs are likely to drive down chlor-alkali production rates, narrowing the gap between seasonally strong demand and plentiful – and lengthening – supply.

The move comes after an attempt by several producers to raise prices in July failed in the market when plant utilization rates showed the highest monthly production of caustic soda in six years for July.

Supply has been perceived as long in the US market and integrated producers have found value on the chlorine side of the chlor-alkali production process by raising prices on polyvinyl chloride (PVC).

Buyers agree that demand is seasonally strong, but counter that supply has far outpaced the growth in demand. Several on Friday said that the move is pre-emptive to prevent prices from moving down as would be expected in a market with the supply outbalancing demand.

Oxy has a reputation of being bullish on price increases. The company has announced price increase initiatives during each of the last four quarters, but only achieved increases in one, the second quarter of this year. Other quarters either saw prices roll over from the previous quarter or actual declines.

Major US caustic soda producers include Axiall, Dow Chemical, Formosa Plastics, Shintech, Oxy, Olin and Westlake Chemical.

( $1 = C$1.08)

By Bill Bowen